Medtronic Expected To Report Flat YoY Earnings Despite 55% Revenue Growth

Shares of Medtronic PLC MDT are surging on Monday, as the company prepares to announce its fourth quarter financial results, scheduled for Tuesday morning.

According to Estimize, expectations point towards pretty much year-over-year earnings, even though revenue is projected to come in substantially higher than a year ago.

In the fourth quarter last year, the company reported earnings of $1.12 per share on revenue of $4.566 billion. For the current quarter, revenue is expected to come in north of $7 billion: the company guided revenue of $7.302 billion, the Street models revenue of $7.121 billion, and the crowd, $7.101 billion.

In spite of the marked increase expected in the revenue front, the company guided almost flat earnings (year-over-year) of $1.11 per share, same as the crowd, while experts are modeling earnings of $1.10 per share.

The second chart, featured above, illustrates the evolution of sentiment over time. As it can be appreciated, the crowd’s expectations remained basically flat. However, the Street’s consensus rose substantially over February, before establishing at $1.10.

Medtronic-Covidien’s First Time

In a recent article, analysts at Zacks say that Medtronic is “likely to beat earnings because it has the right combination of two key ingredients.” Namely: an Expected Surprise Prediction of 0.9 percent and a Zacks Rank #3 (Hold). “The combination of Medtronic’s Zacks Rank #3 and +0.90% ESP makes us reasonably confident of a positive earnings beat at the company,” the experts say.

The current is the first quarter in which the combined Medtronic-Covidien will report results. According to the note, the merger is “expected to meaningfully accelerate all three fundamental growth strategies of Medtronic – therapy innovation, globalization and economic value,” and the analysts hope that these benefits will be reflected in the combined company's performance this quarter.